After Walt Disney, Can M&A Be Far Away?

After Disney's announcement that it would offer its own direct-to-consumer platform "every media company "wants to invest in OTT distribution," Barclays analysts write. Does that mean more M&A is on the way?

But it's not just Disney. In a note to clients this morning, Barclays analyst Kannan Venkateshwar and team offered three takeaways: That subscriber losses are picking up speed; that advertising growth is slowing; and that every media company "wants to invest in OTT distribution." And they go on to note that M&A is seen as one of the ways out even if "on the distribution side, M&A combinations being discussed seem to increasingly need leaps of faith rather than being driven by compelling economics." They explain:

Many deals speculated recently, involve companies with high leverage, and mediocre competitive positioning, with major financing hurdles to overcome. In our M&A outlook, we had suggested that three companies could become part of M&A discussions first, Charter, Sprint and Dish. Thus far we have already seen a lot of activity around Sprint and Charter. However, in our opinion Dish could be the most interesting from an M&A perspective given time constraints on everyone in the distribution ecosystem including Dish.

Shares of Walt Disney have risen 0.8% to $102.11 at 12:!5 p.m. today, while Charter Communications (CHTR) has fallen 0.9% to $395.07, Sprint (S) has climbed 3.7% to $8.33, and Dish Network (DISH) has advanced 0.4% to $58.40.

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.